Open Thread

Here are some thoughts from a guy who writes a daily investment letter:

Here is something counterintuitive that you should think about. Now that interest rates are rising, we are actually going to see some housing market strength. We are actually going to see that the housing market has a slight positive delta to interest rates. How can that be? Well, it is the last-chance phenomenon–people see rising interest rates, and if they were at all thinking about buying a house, they say, “I’d better hurry up, before interest rates go up any more.” Wait and see. There is going to be an uptick in housing over the next few weeks and months.

Naturally, any sustained higher interest rate environment is a negative for housing prices, and we may get that soon enough. But there is good news. The good news is that people have been deleveraging through defaults and loan mods, and there seems to be little indication that people are doing anything stupid like refinancing into adjustable rate mortgages. People, at least the people I talk to, are smart, and they know that rates are low, and it won’t be that way forever.

As usual, it makes sense to be contrarian, as much as we hate that word. With interest rates where they are, the market is telling the average borrower that he should be taking out as much debt as possible. But people are doing the most suboptimal thing; they are paying down debt and deleveraging at the worst possible time. With interest rates where they are, the market is telling you that cash is the enemy. But people are disposing of assets and turning them into cash as fast as they can. They will be wholly unprepared for the inflation that will inevitably follow.

I have said millions of times that it is right to take out as much debt as possible and to buy assets. I will admit that emotionally, this is more difficult than it sounds. But cash is absolutely the worst place to be, and even though nobody anticipates anything like a bull market in property (least of all me), it is superior to leaving it in worthless paper.

Nobody should be afraid to buy a house.

“Lechacal, there’s no service on the railroad from 125th St. to Grand Central.”

That’s fine. It’s a few minutes. Not like going underground to get into work with a bunch of European clients sending you email after email and asking you to get on conf calls and it’s 8 am and you need to be at your desk at 9 no matter f’ing what and then the conducter on the F train announces that the F just turned into the G, or waiting an eternity at w4thst or rock ctr for the m, or some kid slashes moms and pops and jumps in front of the G train and fucks your entire day, or some asshole gets sick on the tain in front of you and you’re stuck in the tunnel forever while you know everyone is wondering where the fuck you are and why you aren’t responding to all of the emails.

If you have a Verizon phone, you should occasionally “reboot” it to find newly installed signal towers.

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Option 2

M4L, sent you email.